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spring2008_midterm1 - First Midterm Exam Econ 150b...

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First Midterm Exam Econ 150b. Intermediate Microeconomics February 6, 2008 Please put your discussion-section time and TA’s name on the blue books. 1. True or False? Explain. (a) The optimal solution of the consumer’s problem depends not only on the con- sumer’s preferences but also on the particular utility function that the consumer has. That is, two consumers with different utility functions but same preferences, may choose different bundles optimally. This is because the marginal rate of substi- tution is not fully determined by the preference relation, but depends on the utility function. (b) Every consumer whose preferences are represented by a utility function has transi- tive preferences. (c) The marginal rate of substitution between two goods equals (minus) the ratio be- tween the marginal utilities. (d) The slope of the budget line has a kink whenever the two goods are perfect com- plements. (e) Every inferior good is a Giffen good.
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